Benefit function and individual preferences. A generalization of the zero-maximum principle

Juan Aparicio, Jesus T. Pastor

Abstract


In this paper we show that given a utility threshold Luenberger’s benefit function correctly represents individual preferences as long as specific reference commodity bundles are considered. We further show a condition which is sufficient for reaching Pareto optimality that generalizes the zero-maximum principle proposed by Luenberger. Under our hypothesis, the social benefit could be positive, negative or zero, and not necessarily always zero.


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References


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DOI: https://doi.org/10.17811/ebl.1.1.2012.12-20

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ISSN: 2254-4380